The big shift in Labour's economic policy in opposition has been from anger to sorrow. The two Eds, Balls and Miliband, still believe that George Osborne's austerity plan has been a catastrophe – suffocating growth, causing needless misery and having the opposite effect on the public finances to the one advertised. But a result of that failure is that the deficit and debt burden that were supposed to be tamed in a single parliament will dominate exchequer calculations for another five years. Labour's full-throated outrage at the chancellor's folly has given way to muted recognition of the budget horrors awaiting the next government.

This change in tone describes a contradiction in Miliband's bid for power. He needs to be honest with voters and with his party about the limitations of what any government can achieve in times of scarcity, while simultaneously firing them with hope that regime change will make things better. If Labour wants permission to script the next act of British economic policy, it has to stop sounding as if fiscal consolidation is always tragic.

But it isn't working. Many voters still don't trust Labour with their money. The Conservatives have done a thorough job painting the economic crisis in shades of Labour misrule. But the opposition's equivocations haven't helped.

Balls continued to berate the Tories for economic dunderheadedness and to urge a change of course – the "five-point-plan for jobs and growth" – when it was already clear that both growth and jobs were making a comeback. Miliband's team grew impatient, wanting to drop the running commentary on what the coalition should have done and get talking about what Labour would do in the future. Eventually, last summer, the five-point-plan disappeared. "We killed it," one senior Miliband aide told me. "We put a pillow over its face until it stopped moving."

The strategy then became changing the terms on which the economy was debated. Miliband judged that a return to growth would not translate into a rise in living standards for most people. His ambition was to establish fairness in the distribution of wealth as a rival test of success to rising GDP. The device for changing the subject was the shock-and-awe pledge to freeze energy bills and, for a time, it did the job. Even uncharitable judges of Miliband's leadership accept that his party conference speech last year opened a new front in political combat. But the advantage was spent without any increase in the number of people who believe life would get easier under a Labour government.

Woven through all these interventions is the recognition that money will be tight. Balls referred to "tough decisions to cut public spending". Miliband's theme for the week is "big reforms, not big spending". The line has been crafted as a rebuttal to the charge swirling around Labour that caution has trumped radicalism; that Miliband's occasional capacity for boldness has been overwhelmed by the forces of crippling Gordon Brown-style calculation in his shadow cabinet, his entourage of advisers or, just maybe, in his own breast.

The Labour leader's critics agree that radicalism is lacking. But few can agree on what it would look like. Craving boldness is too often a euphemism for wishing Labour's predicament were something other than what it is; that there was a way to promise immediate improvement in everyone's lives without giving them money. It is code for wanting more people to understand Miliband's economic argument, which is really a way of wishing it could be made better.

Alternatively there is a view that Labour's offer is not going to change much between now and next May, and so the only hope is to rely on sheer organisational discipline to get over the general election finish line. As one senior figure in the campaign puts it: "Everyone needs to shut the fuck up, get back in the trench and hold the line."

But there are ways that Labour can face financial scarcity with optimism. There are creative ideas for delivering public services on tight budgets in Jon Cruddas's policy review, in Adonis's report and in local government, where the councillors are already governing with scarce resources. But that is not the story the party has told itself about austerity.

Miliband and Balls have said plenty of times that tough choices lie ahead, but the party's body language belies those declarations. Voters can feel the tension. Like a child presented with a dish of unfamiliar vegetables, Labour takes little bites of fiscal reality, pulls a face, pushes the numbers around the plate, and looks around the room hopeful of some reprieve. There isn't a problem knowing what the task involves; there is a problem looking enthusiastic about it.